Intermediate Accounting: Reporting and Analysis
2nd Edition
ISBN: 9781285453828
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Chapter 14, Problem 12RE
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Zotar Company has bonds payable outstanding in the amount of $5,600,000, and the Premium on Bonds Payable account has a balance of $150,000. Each $1,000 bond is convertible into 10 shares of common stock with a par value of $1 per share. All bonds are converted into common stock.InstructionsPrepare the journal entry for the conversion assuming the book value method was used.
James Company has outstanding 3,000, $1,000 bonds. Each bond is convertible into 50 shares of $12 par value common stock. The bonds are converted on December 31, 2018. The unamortized discount is $40,000 and the market price of the stock is $35 per share. Record the conversion of the bonds for James Company.
Crane Limited had $2.39 million of bonds payable outstanding and the unamortized premium for these bonds amounted to $44,600. Each $1,000 bond was convertible into 20 preferred shares. All bonds were then converted into preferred shares. The Contributed Surplus - Conversion Rights account had a balance of $21,500. Assume that the company follows IFRS.
a. Assuming that the book value method was used, what entry would be made?
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b. Assume that Crane Ltd. offers $9,000 to induce early conversion. What journal entry would be made?
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Chapter 14 Solutions
Intermediate Accounting: Reporting and Analysis
Ch. 14 - Prob. 1GICh. 14 - Why does issuing debt result in an income tax...Ch. 14 - What is a bond? Define face value, maturity date,...Ch. 14 - What is the difference between a mortgage bond and...Ch. 14 - Prob. 5GICh. 14 - Prob. 6GICh. 14 - Prob. 7GICh. 14 - Prob. 8GICh. 14 - Prob. 9GICh. 14 - Prob. 10GI
Ch. 14 - Prob. 11GICh. 14 - Prob. 12GICh. 14 - Prob. 13GICh. 14 - What is a call provision? Why do companies often...Ch. 14 - Prob. 15GICh. 14 - When do companies recognize gains and losses from...Ch. 14 - Prob. 17GICh. 14 - Prob. 18GICh. 14 - Prob. 19GICh. 14 - Prob. 20GICh. 14 - Prob. 21GICh. 14 - Prob. 22GICh. 14 - Prob. 23GICh. 14 - Prob. 24GICh. 14 - Prob. 25GICh. 14 - Prob. 26GICh. 14 - Prob. 27GICh. 14 - Prob. 1MCCh. 14 - Prob. 2MCCh. 14 - Prob. 3MCCh. 14 - Prob. 4MCCh. 14 - Prob. 5MCCh. 14 - Prob. 6MCCh. 14 - Prob. 7MCCh. 14 - When the cash proceeds from a bond issued with...Ch. 14 - Prob. 9MCCh. 14 - Prob. 10MCCh. 14 - Prob. 11MCCh. 14 - Prob. 12MCCh. 14 - Prob. 1RECh. 14 - Prob. 2RECh. 14 - Prob. 3RECh. 14 - Prob. 4RECh. 14 - Prob. 5RECh. 14 - Prob. 6RECh. 14 - Prob. 7RECh. 14 - Prob. 8RECh. 14 - Prob. 9RECh. 14 - Prob. 10RECh. 14 - Prob. 11RECh. 14 - Prob. 12RECh. 14 - Prob. 13RECh. 14 - Prob. 14RECh. 14 - Prob. 15RECh. 14 - Prob. 1ECh. 14 - Prob. 2ECh. 14 - Prob. 3ECh. 14 - Recording Bond Issuance On January 1, 2016, Knorr...Ch. 14 - Prob. 5ECh. 14 - Prob. 6ECh. 14 - Prob. 7ECh. 14 - Prob. 8ECh. 14 - Prob. 9ECh. 14 - Prob. 10ECh. 14 - Prob. 11ECh. 14 - Prob. 12ECh. 14 - Prob. 13ECh. 14 - Prob. 14ECh. 14 - Prob. 15ECh. 14 - Prob. 16ECh. 14 - On January 1, 2015, when its 30 par value common...Ch. 14 - Prob. 18ECh. 14 - On January 1, 2019, Conroe Corporation sold...Ch. 14 - Prob. 20ECh. 14 - Prob. 21ECh. 14 - Prob. 22ECh. 14 - Prob. 23ECh. 14 - Prob. 24ECh. 14 - Prob. 25ECh. 14 - Prob. 26ECh. 14 - Prob. 27ECh. 14 - Prob. 28ECh. 14 - Prob. 29ECh. 14 - Prob. 30ECh. 14 - Prob. 31ECh. 14 - Prob. 1PCh. 14 - Prob. 2PCh. 14 - Prob. 3PCh. 14 - Prob. 4PCh. 14 - Prob. 5PCh. 14 - Prob. 6PCh. 14 - Prob. 7PCh. 14 - Prob. 8PCh. 14 - Prob. 9PCh. 14 - Prob. 10PCh. 14 - Prob. 11PCh. 14 - Prob. 12PCh. 14 - Prob. 13PCh. 14 - Prob. 14PCh. 14 - Prob. 15PCh. 14 - Prob. 16PCh. 14 - Prob. 1CCh. 14 - One way for a corporation to accomplish long-term...Ch. 14 - Prob. 3CCh. 14 - Recording Convertible Debt Zakin Co. recently...Ch. 14 - Prob. 5CCh. 14 - Long-Term Notes Payable Business transactions...Ch. 14 - Prob. 7CCh. 14 - Prob. 8CCh. 14 - Prob. 9CCh. 14 - You are an accountant for Taos Company, which has...Ch. 14 - Prob. 11CCh. 14 - Prob. 12CCh. 14 - Prob. 13C
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- For each of the unrelated transactions described below, present the entries required to record each transaction. Please fill in all the boxes as shown in the image. 1. Headland Corp. issued $21,400,000 par value 9% convertible bonds at 98. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. 2. Sage Company issued $21,400,000 par value 9% bonds at 97. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $5. 3. Suppose Sepracor, Inc. called its convertible debt in 2020. Assume the following related to the transaction. The 10%, $10,000,000 par value bonds were converted into 1,000,000 shares of $1 par value common stock on July 1, 2020. On July 1, there was $51,000 of unamortized discount applicable to the bonds, and the company paid an additional $68,000 to the bondholders to induce conversion of all the bonds. The company records…arrow_forwardAction Company sells bond investments classified as trading securities for $99,000. The face amount is $100,000; unamortized discount is $2,000. What must be included in the journal entry to record the sale?arrow_forwardFor each of the unrelated transactions described below, present the entries required to record each transaction. 1. Ayayai Corp. issued $ 18,600,000 par value 11% convertible bonds at 99. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. 2. Pina Company issued $ 18,600,000 par value 11% bonds at 98. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $ 5. 3. Suppose Sepracor, Inc. called its convertible debt in 2020. Assume the following related to the transaction. The 12%, $ 9,300,000 par value bonds were converted into 930,000 shares of $1 par value common stock on July 1, 2020. On July 1, there was $ 51,000 of unamortized discount applicable to the bonds, and the company paid an additional $ 78,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.…arrow_forward
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